Fixed deposit schemes offered by banks are regarded as some of the safest avenues for investment. With the assurance that your money is secure, many individuals prefer to keep their savings in these accounts. When you invest in a fixed deposit, you can expect to receive your principal amount along with interest at maturity after a specified period. Interest can be earned through monthly, quarterly, or annual payouts, or it can be taken along with the principal at maturity.
Different banks offer varying interest rates on fixed deposits, and it’s essential for investors to be aware of these rates before making a decision. Notably, State Bank of India (SBI) and Bank of Baroda have set distinct interest rates for their fixed deposit schemes. Below, we’ll explore the interest earned on a deposit of ₹8 lakh for a five-year term.
Interest Rates Comparison:
- State Bank of India (SBI):
- General Citizens: 6.50%
- Senior Citizens: 7.50%
- Bank of Baroda:
- General Citizens: 6.50%
- Senior Citizens: 7.40%
Maturity Amount Calculation:
If you deposit ₹8 lakh in a fixed deposit scheme for five years:
- State Bank of India:
- Regular Customers: ₹11,04,336
- Senior Citizens: ₹11,59,958
- Bank of Baroda:
- Regular Customers: ₹11,04,336
- Senior Citizens: ₹11,54,279
Why Choose Fixed Deposits?
Among various investment options, fixed deposits remain highly popular due to their reliability. While investments in mutual funds are on the rise, fixed deposits consistently attract individuals looking for guaranteed returns. Many families utilize FDs for significant life expenses, such as children’s education or weddings. In fact, it is common for parents to open FD accounts in their children’s names at birth, allowing the funds to grow and be available for future needs.
Tax Benefits:
Investing in fixed deposits also offers tax benefits under Section 80C of the Income Tax Act, making it a financially wise choice for many.
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